This year began with a flying start for the Robin Hood Tax as in January the European Union gave the green light to 11 countries to implement a Financial Transaction Tax (FTT). This was a huge step forward, a tax estimated to raise €37billion a year is in sight and could be implemented as early as January 2014. The money would provide vital funds that could pay for healthcare and education at home, help people in the poorest countries and fight climate change.
This decision was made possible when European Union Finance Ministers voted in favour of it with 23 votes for and 4 abstentions. As the majority of countries voted for it, it meant skeptical countries – like the UK – were no longer able to block this popular move. The European Commission then produced a formal proposal to shape the discussions amongst ‘the eleven’ for exactly what the FTT in Europe would look like.
But, just as we thought we could start celebrating this progress – UK Chancellor George Osborne, in what looks like a desperate move, mounted a legal challenge to the European FTT.
Simply to defend one rather rich square mile against the wishes of people in Britain and across Europe. Not content with letting our banks off scot-free, Osborne now wants to prevent European countries like Germany, France and Italy from making their financial sectors pay to repair the economic damage they caused.
So what exactly is the legal challenge?
The legal challenge seeks to annul the entire decision to go ahead with the FTT in Europe – basically reversing the decision made at the Finance Ministers meeting in January.
Why does he want it annulled?
In particular the chancellor is against the ‘extra-territoriality’ of the tax. Put more simply this means that Osborne is upset that the tax will cover transactions outside the 11 European countries who are implementing the FTT. In other words that UK companies might end up paying it. However this is hypocritical because the UK already has an FTT on share transactions (the Stamp Duty), which brings in £3 billion a year and everyone has to pay it wherever in the world they come from.
It works like this: if you buy a share issued by a company registered in the UK, wherever you purchase it, and whatever nationality you are, you have to pay the tax or you don’t end up owning the share. So Osborne is arguing that Europe’s FTT shouldn’t have the same design features as the UK’s current FTT. But it needs to be designed this way exactly so that the tax isn’t avoided.
Resorting to lawyers is seemingly the last refuge of a chancellor who has lost the argument. This legal challenge is morally wrong and threatens to derail the entire progress of the FTT in Europe.
We must stop him.
Support for this tax is overwhelming: world leaders, faith leaders, economists, Nobel prize winners all cheered the lead taken by European countries. Don't let George Osborne wreck this progress.